Hanesbrands Q1 Earnings Beat Estimates, Sales Increase 2.1% Y/Y

Core Insights - Hanesbrands Inc. (HBI) reported a year-over-year increase in both net sales and earnings for Q1 2025, with adjusted earnings per share of 7 cents, surpassing the Zacks Consensus Estimate of 3 cents, while net sales of $760 million missed the estimate of $766 million [1][8] Financial Performance - Adjusted gross profit rose 6% year over year to $316 million, with an adjusted gross margin of 41.6%, up nearly 165 basis points, attributed to reduced input costs and effective cost-saving initiatives [2] - Adjusted SG&A costs decreased by 5% year over year to $235 million, with a reduction in percentage of net sales to 31%, largely due to disciplined expense management [3] - Adjusted operating profit increased 61% year over year to $81 million, with an adjusted operating margin of 10.7%, up 390 basis points [3] Segment Performance - U.S. Segment: Net sales decreased 1.4% year over year to $536.2 million, impacted by softness in the Intimate Apparel segment, although growth was seen in Basics, Active, and New business lines [4] - The segmental operating margin improved to 20.9%, up almost 285 basis points, driven by cost-saving initiatives and a favorable product mix [5] - International Segment: Net sales decreased 2.2% to $195.5 million, with a $12 million headwind from unfavorable foreign exchange rates; however, on a constant-currency basis, sales increased 4% year over year [6] Guidance - For Q2 2025, the company projects net sales from continuing operations of $970 million, with an estimated $15 million foreign currency exchange rate headwind [10] - Operating profit from continuing operations is estimated at $129 million, with adjusted operating profit expected at $136 million, excluding restructuring charges [11] - For the full year 2025, net sales are expected between $3.47 billion and $3.52 billion, with an estimated $60 million headwind from foreign currency exchange rates [12] Cash Flow and Debt - The company ended the quarter with cash and cash equivalents of $175.9 million, long-term debt of $2.32 billion, and total stockholders' equity of $43.4 million [8] - The company reported negative $108 million in net cash from operating activities and negative $119 million in free cash flow for the first quarter [8]